Survivor annuity and taxes


Q. I plan on retiring in August and have a question about federal and state tax. Is the annuity taxed before the spousal is taken out? Or is the spousal taken out, then whatever is left is taxed?

A. I assume that you are asking about the tax consequences of electing a survivor annuity for your spouse. The reduction in your own annuity occurs when it is adjudicated by the Office of Personnel Management. Therefore, the starting point for federal taxation is the annuity you receive, not the one you would have received if you hadn’t elected a survivor annuity. However, since a portion of your annuity represents a return of the already-taxed contributions you made to the retirement system while working, the actual taxable amount depends on a formula that, among other things, includes the combined ages of you and your spouse. For more information, read IRS Publication 721, Tax Guide to U.S. Civil Service Annuities, available at


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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